Beware — Employer May be Liable for ADEA Violation by Independent Contractor

The Age Discrimination in Employment Act (ADEA) makes it unlawful to discriminate in the workplace against an individual over the age of 40. The Act specifically includes a prohibition against refusing to hire an applicant based on his or her age. Recently, a federal court of appeals broadened that prohibition by holding that an employer may be held liable for discrimination by third parties — including an independent contractor — who are authorized by the employer to make hiring decisions for the company. Halpert v. Manhattan Apartments, Inc., 2d Cir., No. 07-4074-cv, September 10, 2009. An employer’s liability is predicated on whether the contractor was acting as the employer’s agent, with direct or ostensible authority to act on behalf of the employer.

This case could have a significant impact on companies who contract out various human resource functions to third party contractors, such as a PEO or staffing agencies.

Employers that use an independent contractor to conduct interviews and assist in hiring should become familiar with this case, and must recognize that the ADEA’s reach extends to a company that use independent intermediaries to conduct activities related to employees or applicants. Potential ADEA liability for an employer does not depend on whether the individual acting for the company is an actual employee or an independent contractor. An individual can act as an authorized agent of the employer regardless of his or her employment status.

Whether the Ninth Circuit Court of Appeals will follow the holding in the Halpert case extending liability of an employer under the ADEA remains to be seen.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at (619) 525-7000 or daly@dalylawfirm.co.